2.3.23: Audio automatically transcribed by Sonix

2.3.23: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Producer:
Any examples used are for illustrative purposes only and do not take into account your particular investment objectives, financial situation or needs, and may not be suitable for all investors. It is not intended to predict the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.

Producer:
Welcome to Money Matters with Mike, with your host, Mike Zaino. Get set for a full hour on financial information and economic news affecting your bottom line. Mike works hard each day to educate Americans like you on how to reach the financial freedom they've worked so hard for. And he can help you, too. So now let's start the show. Here's Mike Zaino.

Mike Zaino:
What's up? What's up? What's up? It's Mike Zaino coming to you live from Fort Mill, South Carolina. Happy Saturday, people. What a great day to be alive in these United States of America. This show, Money Matters With Mike is a show designed to arm you with information action that you can chew on each and every single week. Meat on the bone, if you will. And today we're going to bring it again, today's show. We're going to continue our discussion on the Smart Retirement Plan series. And as always, I have the distinct honor and privilege of being joined by the one and only my co-host and producer extraordinaire, Mr. Matt McClure. Matt, how are you doing today, brother?

Producer:
I am doing great, Mike. I hope you are as well. And boy, you talk about meat on the bone. We got we got plenty of it for you today.

Mike Zaino:
We do a lot of stuff to talk about.

Producer:
Yeah, we've got the Secure Act 2.0 that passed Congress late in the last session. We mentioned it just briefly on last week's show, but there are a lot of changes in that legislation that can affect your retirement planning and can affect your financial future in general. So we'll go through a lot of those changes and what you need to know the good, the bad, the indifferent, and how you can take advantage of some things in the new regulations there. So so that will be great and very important to pay attention to. We'll also continue with our Smart Retirement Plan series as well. You know, we've been going through that for a couple of weeks here and we'll continue to do so over the next few weeks. And a couple of really important points to make during today's show on that Smart Retirement Plan series portion of it. And before we get too deep into the show today, Mike, I wanted to mention to our listeners, if you out there hear anything over the next hour that we're going to be with you that sort of piques your interest and makes you say, Hey, I think I need to find out more about this, or maybe I need to give a call, see what all this is about. Get some help with my retirement planning, planning for my financial future as well. Just reach out to Mike Zaino. He's not hard to find. You can give him a call at 704 560 1573. Or you can go to MoneyMattersWithMike.com that is the website.

Mike Zaino:
Or on the socials mat anybody can on Facebook search Money Matters with Mike you can go to YouTube search the same thing. Money Matters with Mike. Give us a like on Facebook and YouTube. Subscribe to the channel. We'd love to give you that information on a weekly basis. And heck, if you know anybody that could use some information, make sure you share it as well.

Producer:
Yeah, absolutely. Do spread, spread the love around. Spread the the love for Money Matters with Mike to everybody that you know. And we're going to spread some love and some words of wisdom right now as we get things kicked off with our quote of the week.

Producer:
And now for some financial wisdom, it's time for the Quote of the week.

Producer:
And those aforementioned words of wisdom this week might come from somebody who might know a thing or two about money. Gentleman by the name of Warren Buffett. I think you've heard of him. He's one of the most wealthy people in the entire world. So, yeah, you definitely heard of him at 92 years old. But Warren Buffett said this once, quote, Someone is sitting in the shade today because someone planted a tree a long time ago.

Mike Zaino:
Yes. What what wise words from the Oracle of Omaha. And if you think about that, he's really, I think, talking about generational wealth, which we've talked about on on shows in the past. Right. And if you want to pay attention to general wealth or generational wealth, you need to pay attention to things like the Secure Act 2.0 that just passed in late 2022 or in the congressional session and is now become the law of the land.

Producer:
Hungry for something to chew on? Here's some meat on the bone.

Mike Zaino:
Today's meat on the bone. We're going to talk about what that actually means for you and your retirement and give you an overview of changes that affect not only retirees but pre retirees and the planning that they need to make as well. And the first thing that I want to talk about is those things called required minimum distributions, right? So if you're fortunate enough to never need money out of your tax deferred. Employer sponsored plans or IRAs. It used to be way back when that the April 1st, following the year that you turned 70 and one half. Couldn't have been more convoluted. You had to take required minimum distributions. The IRS would come knocking at your door looking for you to take those things. Why? So that they could collect taxes? Well, then the Secure Act passed and it changed it from 70 and one half to the year. Now that you turn 72 well, 2.0 just passed and went into effect in January. And that is now beginning at the age of 73 and eventually will be phased all the way out to age 75 by the year 2033. So with the age for those RMDs increasing, we suggest letting your money grow. If you can afford to postpone withdrawing your money from those accounts for income needs. And this also means that you have an extended window, some extra runway, if you will, to complete a Roth conversion and kick the IRS out of your retirement plan. And you'll definitely want to make sure that you complete those conversions, those Roth conversions, before you need to start withdrawing from your retirement. So here's another thing. Starting in 2024, RMDs will no longer be required from employer based Roth retirement plans, and employers can now contribute matching contributions with after tax dollars.

Mike Zaino:
The penalty that used to be 50%, the stiffest IRS penalty in America decreased from 50% to 25% of that RMD amount and will further decrease to only 10% if you correct your mistake. But in order to do that, you must file an amended tax return. So those are the RMDs catch up contributions. Those will increase in 2025. That's in a couple of years. 441 KS 403 B's governmental plans like 450 sevens and the TSP, as well as four IRA account holders. And what that does is gives pre-retirees more room to catch up and save where the current catch up limit is $7,500 a year for those that are age 50 and older. As of one one 2025, they'll be able you'll be able to do 10,000 a year for those who are age 60 through 63, and that amount will be indexed to inflation. So it will automatically adjust yearly based on the consumer price index and then IRAs, where the current limit is now 1000 starting in 2024, that limit will be also indexed to inflation. So it could also increase annually based on the CPI. This one I love. This was a change that I love. 529 college savings plans. Now, if you have one of those after 15 years, those assets inside the 529 plan can be rolled over into a Roth IRA for your beneficiary. Obviously that subject to the annual Roth IRA contribution limits and has a lifetime limit of 35,000 so that you can see if you want that generational wealth, you can do some planning and things like paying attention to the the Secure Act 2.0 will go a long way. Matt Yeah, accomplishing that goal for sure, right?

Producer:
Absolutely. Will. And it's so funny to me, looking at a lot of these provisions, I'm like, Oh, I'll like, that sounds like that's a good thing. Oh, that's a good thing too. Oh, that's so it just just goes to show you. Uncle Sam's not always your mean uncle. He can sometimes be or not, at least slightly nicer. Uncle, I guess. Maybe is the right thing to say. I don't.

Producer:
Know.

Mike Zaino:
Yeah, I don't. I don't know if. If it's the. The cynic in me sometimes when I look at the root cause of why they're doing that, I mean part of me thinks that they are pushing off those required minimum distribution time. All right, Time. What's the word I'm looking for?

Producer:
Just timetable.

Mike Zaino:
Timetable. There you go. Okay. In order to allow you to grow that nest egg even bigger, so that when those RMDs do kick in, that they get to tax the farm. And it's a bigger farm, right? So yeah, bottom line is I think it'll end up being better though for, for everybody because they don't have to take them as soon.

Producer:
Yeah. Yeah. Definitely. So it's a more convenient thing for folks and something that you don't have to worry about until a little bit later on. And you know, any time you get to delay having Uncle Sam be your partner in retirement, you are you're doing a good thing there, making sure, of course, that he gets his fair share, but no more than that. So. Right. A lot of changes there in the Secure Act 2.0. And of course, folks, again, if you have any questions about that, call Mike Zaino 704 560. 1573. And you spoke about Ros a second ago there? Mike A couple of different times having to do with 529 college savings plans and those being able to be rolled over into a Roth IRA for the beneficiary. But then also some, you know, under our talks about RMDs there mention of Roth as well. We're going to share this is a kind of a little cost cutter of the week and it has to do with Roth's as well.

Producer:
Here's the cost cutter of the week.

Mike Zaino:
All right. So we talked a little bit about doing a Roth conversion. And for those of you who don't know what that is, if you've got room left inside of your tax bracket before you elevate to the next tax bracket, during those particular years, you might consider taking some money out of your traditional tax deferred IRAs or for one case or employer sponsored plans and doing what's known as a Roth conversion. So you're only taking the amount that is left and that wouldn't elevate you into a higher overall tax bracket. So you want to try to complete those Roth conversions, if at all possible. By the time you turn 63 years of age, why? Well, Medicare, what people are eligible to file for at age 65 has a two year lookback on your tax returns. And few people realize that financial changes made by the age of 63 can affect them when they turn 65, because Medicare is going to look at the tax returns that you file starting at age 63. And obviously the more money you make in those later years, 64 and 65 there could potentially affect the amount of Medicare premiums that you pay. So that's our cost. Cutter tip of the week is to try to complete your Roth conversions if you're going to do them by the time you turn 63 so that they're not involved in any of the decision making on the Medicare side as to how much you're going to pay.

Producer:
Yeah. And I bet there is somebody out there right now, Mike, who is listening to the show who had they not been listening to the show, would have no idea about that. And that, I think, just highlights the importance of the show and why I love being a part of it so much is because I learn something every time and I know our listeners do as well. So that's that's great and a great, great tip.

Mike Zaino:
That's good cheddar right there, right?

Producer:
That's right. Exactly. Exactly. Let you keep a little bit more of your cheddar in your own pocket there, too. So that's it. Well, great little cost cutter there as a as a tip for our listeners as well. And it all comes down to really being being smart about your retirement, being educated, and that's why we're doing this smart retirement plan. And as we're going through the different steps here over these previous week or so here on the show and then continuing on into into following weeks as well as we've got more and more aspects of it to cover today, we're going to start off our conversation with a talk about smart health. And when we talk about health in retirement, it's it's a huge, huge part of all of our lives. You know, growing older, the body gets a little more frail and all of that. So we've got to be thinking about our health when we go into our retirement years.

Mike Zaino:
We can. Matt Retiring can be a stressful time for many people, especially when it comes to planning for their health care needs. Medicare, as we just discussed, is an important part of the retirement planning process, and it's very important to understand. And proper Medicare planning during retirement can help minimize health care costs over the long term and provide other financial benefits as well. So let us help you protect your health throughout you and or your spouse's retirements. Contact us with any Medicare questions at 7045601573. You can also get in touch with us at MoneyMatterswithMike.com Again on Facebook at Money Matters with Mike. But just to give you some facts about Medicare, more than 61 million Americans are covered by Medicare health plans right now. And that's, of course, according to the National Committee to Preserve Social Security and Medicare. As of 2020, 18.5% of the US population is on Medicare. 65% of these survey respondents said that they wouldn't know which part were parts of Medicare that they should enroll in. Also conducted by that survey from 2020 to Single care survey and almost four out of ten Medicare consumers are also enrolled in Medicare Advantage plans, which is Medicare Part C. So Medicare is an absolute integral part of your Medicare, your retirement planning.

Producer:
It really, really is. And it's something that we will all need to be prepared for and plan for. And you just got to have that help along the way to make sure that your I's are dotted and your T's are crossed. I mean, like I said just a few minutes ago, I would never have known. And I'm sure that some of our listeners would never have known about that two year lookback period and all of that. So that's something that you save yourself quite a bit right there on in premiums alone. So as we do get older, I mentioned the body's being a little bit more frail as we age. It just it happens to us all. It's the nature of the beast. But there are some ways to live healthier so that when you get there, that that process might not quite start as quickly as it would have otherwise, right?

Mike Zaino:
Sure. I mean, if your goal is to lengthen your life and who doesn't want to live longer, as long as they can live pain free and still have their, you know, their mind. Right. So the healthier you are, the less reliant you're going to end up being on your health insurance. And so that involves keeping your mind and your body sharp because those two things right there are also going to help with other issues that can arise later in life. So, number one, I want you to exercise regularly, need to eat a healthy diet, maintain a healthy body weight. I know definitely as I've aged, I've tended to pack on a little bit extra weight. Staying socially active is great just simply because you're not just sitting on a couch waiting to die. I've met 50 year olds with one foot in the grave. I've met 85 year olds that go out dancing. Keep your brain stimulated, keeping it your mind active and engage. And that can help prevent cognitive dysfunction or decline. Make sure you get enough sleep. Try to manage stress, stay up to date with medical checkups and screenings, especially those we talk about this a lot. You know, 45 years of age is now the new age for colonoscopy screenings or screenings. A very good friend of mine went in at 45 and they found stage three colorectal cancer. And yeah, I mean, it's it's important to have that stuff done. If you have a history of cancer that is now 35 years of age. So make sure that you're going to get those screenings done, especially. And then mental health retirement can be a huge transition. So it's important to take care of that mental health. And if you feel overwhelmed or if you're experiencing depression or anxiety, seek help. It is not a stigma to go out there and talk to somebody who's a professional at helping you handle those kinds of feelings.

Producer:
Yeah, and I think to too often and for too long, there has been sort of a, you know, a hesitation for a lot of people because of that stigma that's been there in the past. But really and truly, you know, if you need help, get it. There's nothing to be embarrassed about. Nothing to be concerned about what you. Oh, what's so and such going to think of me if I do it? Don't worry about all that. You've got to take. Are you.

Mike Zaino:
Right? Who cares? Get you right? Yeah.

Producer:
Take care of yourself.

Mike Zaino:
Absolutely. The most important piece of real estate that you can protect is the six inches between your left and right ear. I mean, bottom line.

Producer:
It's absolutely true. And you keep that healthy and it can can have such a great impact on the rest of your life, including the rest of your of your physical health. People think of mental health as sort of this, you know, thing that's just sort of isolated by itself. But the stress, the anxiety and all of that can really wear down your body as well and have that huge impact. I mean, you said you said it a minute ago when you saw you've met people who are like 50 years old and have one foot in the grave or the 85 year old who is going out, you know, getting that exercise, getting that socialization, all those things, keeping themselves active mentally and physically and just taking care of themselves. And that shows you the difference right there that that can make.

Mike Zaino:
It does. I mean, and age is a number. I know you know, I met a person earlier this or last month, I should say now because we're in February. I can't believe we're in February already. But, you know, she was turning 40 years old and she was like it was a big milestone for her and she wasn't sure which I'm like, it's only 40. You know, I understand if you're turning 90, but like, you're only 40. And so I was trying to help comfort her and get her over over that, you know, that that hurdle in her in her brain, I mean, the best is yet to come. I mean, my forties was was one of the best decades yet. I'm in my fifties now and it's one of the best decades yet and I'm looking forward to my 6070s eighties and nineties. So age is just a number. It's all relevant.

Producer:
Yeah, I love that. It's all a matter of perspective too, because on the on one side of 40, things look a lot different than the other side when you think about that age. Yeah. As, as I now know.

Mike Zaino:
How many times have we said that Matt youth is wasted on the young, right? I wish I had my 26 year old body with my 52 year old brain.

Producer:
Right? You would be both here in the same boat on that one. Well, okay, So. So we're. Covered smart health. They're taking care of yourself, making sure that you're planning with Medicare in mind as well as you as you as the time as the clock ticks along. I guess I should say it, because that's what happens. But, you know, you got to also think about smart care. And we're specifically talking really about long term care here. And that's something that takes some some separate thought and planning from any discussion about Medicare, because long term care is something that Medicare doesn't even touch.

Mike Zaino:
No, it does not, Matt. And a lot of people mistakenly think that it does. It is estimated now that 13 million Americans rely on long term care services, including around 7 million retirees, as well as individuals with disabilities or chronic health conditions. 69%. That's a big number. 69% of all Americans will require some sort of long term care or assisted living during their retirement years. And if you do not have a plan in place, that burden of care is going to fall onto your family members, onto your friends, your loved ones, then become the unofficial caregivers and these unofficial caregivers. Guess what? They're not paid for their services. And so they're sometimes referred to as informal caregivers, which distinguishes them from paid caregivers such as home health aides or nursing home staff. And in 2015, the National Alliance for Caregiving stated that an estimated 34.2 million unpaid caregivers provided care to an adult or child with a disability or chronic illness. And there are now that was back in 2015. Now there's an estimated 40 million mat, 40 million unpaid caregivers across the country, and whether their family members, whether their friends, whoever it is that's unpaid, who are providing care for someone who's unable to care for themselves, they can be greatly affected by their caregiving responsibilities.

Mike Zaino:
And that can include physical strain, because guess what? Caregiving can be physically demanding and can lead to injuries or chronic health conditions. For them, emotional strain. Caregiving can be emotionally taxing and can also lead to feelings of stress, depression, anxiety. It could create financial strain because giving that care can be costly and lead to some sort of financial burden for those unpaid caregivers who might have to take time off of work or make other financial sacrifices. A lot of them feel socially isolated because they can't get out amongst their friends because they're taking care of you. So they feel disconnected from their friends and from other social networks and it can eventually lead to burnout because it can be so overwhelming that they experience this thing called burnout. And in order to avoid subjecting your family and your friends to those potential stressors, you should work with them and find a financial professional that can address these needs and make sure that you are prepared in the event that you should require those long term care needs in the future. So, I mean, again, smart care is very, very important in the planning process.

Producer:
Yeah, because chances are, as you said with those numbers a few minutes ago, something like more than more than two thirds of all of us are going to require some form of long term care during our retirement years, whether that be an assisted living or a nursing home or, you know, home health aide, something like that. So chances are, yeah, you're going to be in that situation eventually. So definitely plan for it. And what are some of the solutions there as far as paying for long term care during retirement?

Mike Zaino:
Yeah, so so paying for long term care by itself. I mean, obviously you can purchase long term care insurance and depending on your age, that could be cost prohibitive for something that you pray to God you never have to use because long term care insurance does help cover those costs. If you have to go into a nursing home or assisted living facility or have in-home health care, you could also set aside. You can save money for long term care expenses, right? Setting aside that money that's specifically earmarked for that can help cover those costs when the time if the time arises. I specifically like the use and we have talked about this a number of times in past shows of using certain types of annuities to make sure that those are earmarked just for a long term care, because a lot of the annuities out there have special provisions in them that can either double or triple the amount of income that you. Take. If you ever lose two of six of your activities of daily living, you could use your retirement savings. I don't suggest it, but many people use money from their retirement accounts to pay for long term care, and that includes withdrawals from four one KS, 403 BS, TSP, IRAs and proper prior planning. If you have the plan in place will protect you. It'll insulate you from having to drain your retirement accounts. Worst case scenario, you could go on Medicaid. That is a joint federal and state program that can help pay for long term care for those who do have limited assets and income. My grandfather was in a in a state home in South Carolina, and it wasn't the best facility, let's just put it that way. Right? If you're a veteran out there, you may be eligible for benefits that can also help pay for those long term care needs. So if you're a veteran, I hope your ears just perked up.

Producer:
Yeah, absolutely. And I know that a lot of benefits that my dad received during his retirement were great from the VA and they were just just wonderful. Some of that course there's there's the red tape that you got to deal with a lot of times and all that. But in the end, everything was was really beneficial there. There are some scenarios here that we need to talk about as to when we're talking about smart health, smart care, when people might want to seek the help of somebody like you, Mike, a financial professional who can help them with these things, because if you've got questions so this is a guy who has answers right here. And so what are those sort of scenarios where people might say, okay, I got to I got to, you know, really not say pull the Band-Aid off, because that makes it sound like a bad thing, because it's a great thing. But like, I got I got to take the leap here and actually start at least exploring the option of working with you.

Mike Zaino:
Yeah. I mean, just putting it bluntly, if you don't have a health care plan in place for you and or you and your spouse's future, you need to meet with me. If you don't have a formal retirement plan in place, you need to meet with me. Even if you have a formal retirement plan in place. But you haven't heard from your advisor lately, you may want a second set of eyes, and if you're in a good shape, I'll tell you you're in good shape. And so, you know, when we do our comprehensive consultations, we do it at no cost to our listeners. All right? There's absolutely no obligation whatsoever. You will only work with us if it is best for you. And if I can do better than what you are currently in. And so we can help maximize different things in your in your retirement, whether it's your Social Security, whether it's your Medicare or whether it's cutting unnecessary costs from your IRAs, your 401. Ks or any other types of retirement savings account. And like I said, if you don't have any of that in place, you should absolutely pick up the phone and give me a call at 704 560 1573 Head to MoneyMattersWithMike.com. Fill out a contact us page. I'll get back with you. Reach out to me on the socials Money Matters with Mike on Facebook YouTube you know all all the other places that you can find us. And if you know anybody that needs the help, please spread the word. My name and number is not a secret.

Producer:
It's absolutely not. We're telling it to you again here. Mike Zaino at MoneyMattersWithMike.com. Or you can give them a call. 704 560 1573. Those are the ways to get in touch at the website and via the phone. All right. So we've covered smart health, smart care as we continue with our Smart Retirement Plan series here. Smart Risk is the very next thing on the list. And there are a lot of people think smart risk or people think risk that that word. A lot of people might think, oh, I'm going to jump out of a plane or whatever, or go, you know, some thrill seeking something or financially speaking, they might think of just, oh, do I want to put my money at risk? How much risk do I want to take with my money? But it's beyond something like just market risk and the volatility that could come along with that, as we saw last year for sure. So let's talk about the different risks that are involved when you're thinking about your retirement years.

Mike Zaino:
Sure. So if you're riding down the road right now, you might want to pull over and really pay attention to this segment. This is probably besides the Secure Act 2.0 that we went over earlier this right here. I'm going to spend some time on this one because it's huge. When we're talking about building your smart retirement plan, you've got to consider the risks that you will face during your retirement and then learn how to best combat each and every one of those risks. So smart risk investing is an investment strategy designed to maximize your returns while minimizing. Your risk. It's based on the concept that all investments carry some amount of risk and that the only way to reduce the risk is to do what? Diversify. Well, diversifying means that you're in a variety of different asset classes. So stocks, bonds, real estates, commodities, annuities, precious metal and other financial instruments. And investors need to consider their individual needs and goals as well as their risk tolerance.

Producer:
Matt Yeah, it's definitely something that's essential to to consider when you're thinking about having a retirement plan, especially if you want it to be a smart retirement plan, thinking about all of these different kinds of risks. So let's kind of go through a few of these here. The first one we touched on, their market risk is is I think probably financially speaking, and maybe the first one that comes to mind for.

Mike Zaino:
Folks, it is an especially if you're in the retirement red zone, those five years immediately preceding retirement, the five years immediately after you retire, it's a ten year period. If you're in that retirement red zone, market risk is one of the biggest ones you can you can expose yourself to unnecessarily. Your portfolio will be affected rather by changes in the market. And there's two different types of of market risk. You have systematic risk, you have unsystematic risk, and they can cause drastic changes in your investments. So you need to be prepared for volatility and uncertainty in the market by practicing what's known as tactical asset allocation. Or better yet, you don't need to do it. You just need to consult a financial professional who is skilled in the ways of making sure you're diversified and not too much exposed to market risk.

Producer:
Yeah, absolutely. And those two different kinds of risks, you know, those systematic risk, of course, is something that affects the market as a whole. Unsystematic, the exact opposite thing. So you've got to consider both of those. Also, interest rate risk is something that's really hitting home for a lot of folks right now.

Mike Zaino:
It is. The Fed just raised interest rates on this past Wednesday by another quarter of a point 25 basis points. And so interest rates change when there's either a dip or a rise in the overall economy and the Fed tries to combat inflation or stimulate the economy and changes in those interest rates can have a significant effect on American families and they can affect the economy as a whole. That's their whole design by nature is to affect the economy for the better. Sometimes it has the opposite effect.

Producer:
Right? Right, exactly. It depends on exactly what happens and when. Timing has a lot to do with it. And it really, as you mentioned, there, has to do with this next risk that's on our list a lot of the time when we see those interest rates rising, that Fed funds rate, which is what the Federal Reserve, you know, talks about raising each and every time they do. And again, this time it was 25 basis points, which was less than what we've seen before, thank God, thankfully. Yes, absolutely. But they're doing all of that to combat inflation, to help sort of tamp down a lot of the what could potentially be an overheating economy and try and drive drive that demand down. Right.

Mike Zaino:
Right. We've talked about inflation pretty much on every show for the past year. Why?

Producer:
Because that's how big of a deal it is. Yeah.

Mike Zaino:
Why? Because we have the highest inflation rates literally in four decades. It has a significant effect on the spending power of American citizens. And as inflation continues to rise, our spending power does what it decreases. And so when you are planning for retirement, it is crucial. It is imperative that you consider how those rising inflation rates might affect your retirement savings accounts and your future budgets as well.

Producer:
Really super important. They're also a thing to consider public policy and people will will hear that and think, well, I don't control public policy. How do I plan for that? You just sort of have to make sure that you're working with a financial professional who can help you plan for all the all of these risks. And public policy is one of them.

Mike Zaino:
Right. And the people who think that they don't control public policy, they'd be wrong. They control their vote. Right? They control their vote. And the people you elect in office are the people who, as a conglomerate affect public policy. And that affects everything from taxes to retirement accounts to contribution limits. And retirees especially should pay attention to policies related to their pension plans, related to Social Security, benefits, related to health care coverage. Be aware of the latest tax law changes and then how to use them to your advantage.

Producer:
Matt You know, I'm actually I mentioned timing a second ago, Mike, and it's it's funny because, you know, you would think that I was trying to segue us right into this because timing risk is a big thing as well, and it's something that that needs to be a big consideration.

Mike Zaino:
Right? And so a lot of people try to time the market and fail miserably, including money managers. Right. Because you have to be right twice, once on the buy and once on the sell. And a lot of people can get one of those two. Right. Very, very few get both of them right. You can choose when you retire, but you cannot predict what the market will look like when you do. And so your retirement may look a little different if you retire during a recession. Then it would if you retire during a more favorable market and by having a formal retirement plan. You can be prepared for whatever happens because these plans are fluid and they're able to be adapted improvised upon just to enable you to overcome whatever market you might be retiring under.

Producer:
Yeah, you've planned for all of those different scenarios that could happen. And so you make those adjustments as time goes along. It's so, so great and would be such a great feeling to have a plan like that in place. Liquidity risk is another one that we need to talk about here as well. Having access to that money.

Mike Zaino:
Right. So liquidity refers to the ease with which an asset can either be bought or sold in the market without affecting the asset's price. So think back to 2008, the financial crisis and then what happened in 2009 2010. If you wanted to sell a home at that point in time, you weren't getting all time highs. Conversely, let's look back to a year, year and a half ago when the interest rates were so low, approaching 1% and mortgage people could buy mortgages for 1.992%, I refinanced my house at two and a 4%. That was a seller's market. And so you could demand higher prices. Well, you want a plan that allows sufficient access to your savings and funds your money without having to be constrained by what the market is going to allow you to take. End of story.

Producer:
Yeah, it's seriously. Yeah. Just being able to have access to to your funds to that money that you've worked so hard for that you've put away. You want to at least have access to a portion of it, you know, and just have that liquidity is a very big concern, I know, for a lot of people and should be a concern that you think about. Also sequence of returns. I know this is something that you've talked about before as well.

Mike Zaino:
Yeah, we've discussed this on the Meat on the Bone segment in detail. And so if you miss that, please go back and listen to past episodes where I specifically discuss sequence of returns. This is a very, very, very important possibility for those who are retiring. Your retirement funds could take a massive hit if the market experiences a downturn in the early parts of retirement. And while you can't plan for that, you can change what you contribute to your accounts and you can use some guaranteed income strategies to help combat that issue. So sequence of returns is a really, really big one, because think about it, if you are withdrawing money and the markets are going down, your money will never last you as long as you had planned on it to to last.

Producer:
Matt Yeah, it's very true and definitely has that compounding effect as we talk about in other scenarios and situations with your finances. This is a different kind of compounding effect, as it were, also longevity risk. You know, we're we talked about smart health and smart care. This kind of goes hand in hand with that previous portion of the show because people are living longer than than we ever have before.

Mike Zaino:
Which means that your retirement savings has to last longer than it ever has before. So make sure that you're planning for your money to outlive you and not the other way around. You do not want to have to worry about finances in retirement or becoming a financial burden, God forbid, on your children.

Producer:
Yeah, that would not be the best thing for you, for you to do to your kids. Think. Think about your loved ones also as you're planning for your retirement, because it's you know, we talked about that before with smart care. It's like you don't want to become a burden on them. You don't want to become a burden on on the system, as it were as well. And so it's something to think about there. And also, I know this is a big one, too, kind of goes hand in hand with sequence of returns because you don't want to withdraw too much money and be left with nothing later on in retirement. So this is excess withdrawal we're talking about, right?

Mike Zaino:
So excess withdrawals. I mean, if I break down people's retirement into a 30 year time period, the first ten years are your go go years. Those are the years, you know, you're breaking free of a job and you're going out and you're traveling and you're going with family and you're doing stuff. And the go go years, the next ten years are your slow go years. You're still doing it, but maybe not to the extent. And then the last ten years are your no go years, Right? So we try to say try to stick to a guideline called the 4% rule, which basically means you should never draw down more than 4% of your retirement dollars. 4% will last you 25 years. Four times 25 is 100. That assumes very two bold assumptions. Number one, you're not making any money. And more importantly, number two, you're not losing any money. It's almost as if your money is in a vacuum. And so that rule can help control your withdrawals and make sure that you don't draw down on your accounts too quickly. And you can adjust that based on market conditions. But the last thing you want to do is take out too much while you're losing money in the sequence of returns like event, right? So that you don't have any money to finance that first ten years of your go go years.

Producer:
Yeah, people want to people want to go, go. And so you got to do that. If you got to make sure you control your your withdrawals. And I'm glad that you say you know the 4% rule you can use air quotes for the word rule there. It's a guideline more than anything because you can, as you say, adjust it based on whatever conditions are are out there in the market.

Mike Zaino:
Absolutely. If you're older, you can take more. If you're younger, you should probably take less.

Producer:
Yeah. There you go. And right, you say the 4% rule because that that's a nice easy number and you just did the easy math there and everything and it makes sense but use it as a guideline instead of thinking of it as hard and fast chiseled in stone rule. Also health expenses. We discuss that kind of in depth a little bit earlier, health expenses with medical costs really being top of mind for a lot of people because it's top of wallet for a lot of people to.

Mike Zaino:
Absolutely. One of the largest expenses for Americans. And we've talked and discussed in previous shows how, you know, the typical cost for health care and retirements, over 300,000, that's a lot. You need to prepare for those medical costs in retiring in retirement, rather, by having a medicare plan in place that covers you and your spouse throughout the entirety of your lives.

Producer:
And also, speaking of your spouse, you need to be concerned also with the potential loss of either yourself or your spouse.

Mike Zaino:
And that's never an easy one. Mat, right? It is never easy, especially if you've spent any degree of time with your betrothed, my wife and I, this year, in fact, next month, we're going to celebrate our 32nd anniversary of our first date. And then later this year, we're going to celebrate our 29th anniversary. So we've been together a long time. And when your spouse passes away, not only are you going to be grieving, but that's going to make a financial impact on you as well, because if you're already drawing Social Security, well, one of your Social Security's payments passes away with that spouse. The surviving spouse is going to get to keep whichever is more. So you need to be prepared for this loss of income by ensuring that your savings is enough to get you through the transitionary period and beyond.

Producer:
Absolutely. Do re employment is also another thing that we talk about when we're talking about risks here. And people might say, I just got unemployed on purpose, why would I want to go back to work?

Mike Zaino:
One of the biggest pieces of advice I could give anybody is to not retire on emotion. Some people need to understand that they can afford to retire, not just that they're eligible to retire because there's a huge difference. And while some retirees may enjoy going back to work, many don't want to mat, right? So make sure that you have enough in savings to cover your living expenses and give you the quality of life that you want to enjoy in retirement. Because if you plan to to retire and you haven't actually done an analysis of what your income and expenses look like and. What your retirement is going to look like. Then you might end up having to go back to work after a 6 to 8 month period. When you find out that in retirement there's more month than money. And that's another reason, Matt, why it's really important to sit down with a financial professional to help you work through those net numbers.

Producer:
Yeah, very, very important. And a lot of times too, you know, something that people get kind of bitten by are fees, excessive fees that they might have to pay, but they just either didn't consider or didn't know about sometimes. You know, I've been surprised ever since I've been doing this show with you and kind of working in this this financial and retirement planning arena here. So many people don't realize the fees that they're paying for some of the financial instruments that they have that are supposed to be working for them, but they're just charging these excessive fees.

Mike Zaino:
Yeah. And so that's a good tip, right? Watch out for those fees. Most investments are going to include some fees that, guess what, you must pay and we can help you choose options that have lower fees. Some fees are not paid up front. They come out of your returns. Some fees are disguised in the mutual funds that have loads. Right. While you never see the money that is taken from you to cover your fees, your returns will be lower if you have a high fee investment.

Producer:
So that's our look at smart risk. And once again, folks, if you would like to talk to Mike Zaino about it and I would strongly suggest that you do and get your plan underway. Go to MoneyMattersWithMike.com or give him a call. 704 5601573. So we move on now from smart risk here in the last kind of portion of the show to smart safe. And I think that is a that is a kind of a name here, a title of a segment that probably makes people be like, Oh, I can have some safety in my money and maybe still have some growth as well, some good growth because of the year that we just went through with such volatility and such big losses in the major indexes on Wall Street.

Mike Zaino:
Right. So so when we talk about smart risk, that is one of the most important segments that people should be aware of. They need to be aware of the risks. But when we talk about smart, safe investing, this is probably one of my favorite areas because guess what, Matt? None of my clients lost a penny last year. I'll say that again. None of my clients lost a penny last year in any of the vehicles that I had their money in. So smart, Safe investing is a strategy that's designed to generate the highest possible returns while keeping your risk to a minimum. So one of the key components, you know, for money that if you just said, hey, come hell or high water, I don't want to lose below x amount, whatever your X is, then that money is a prime candidate for what's called a fixed indexed annuity or an A for sure. Those are insurance contracts that provide a guaranteed income stream for your retirement, but they can also be set up for growth if you don't need income. They are seen as an alternative to traditional bonds and can provide a way for investors to protect their retirement savings from market volatility. Because last year Matt Bonds were down 12 to 15%. And so these fees are designed to provide additional protection from market downturns while simultaneously providing potential for growth. And so some of the benefits, again, protection from market volatility. So this means that when the market goes up, you're going to participate in gains and some of some of the indices have uncapped potential. When the market goes down, you don't lose a single penny. So imagine you went to Las Vegas and the dealer said, hey, at my table, if you win, you get to keep your winnings.

Mike Zaino:
And if I win, we'll just push, we'll tie. You don't know the house or anything. And that's a that's a pretty good thing. And since the annuities that we use are linked to the performance of this underlying index, the income is not directly affected by short term market fluctuations and it makes them a much more attractive option for investors who are looking for a steady and reliable income stream or growth type product. And guess what? They can be set up tax deferred if you have employer sponsored plans, if you have IRAs that are just sitting out there and you lost a lot of money, I have had people flocking to me, especially over the past six months, that just want to stop the bleeding this morning. I mean, we I was on the phone, busier than a one armed wallpaper hanger all the way leading up to our show today. Believe it or not, at 9:00 am in the morning, I was taking calls earlier this morning. So, I mean, if you want that tax deferred growth, great. If you have or non qualified plans, money that's just sitting in a brokerage account that's been. Leading some to and you want to start putting some of that money into a fixed index annuity. Again, it's for the money that come hell or high water. You are not wanting to go below. A lot of folks like it because it just adds another layer of security. It's like a warm, cozy blanket and it gives you peace of mind that can provide a lifetime stream of income.

Producer:
Yeah, and a lot of stress reduction and all those things that we were talking about earlier with taking care of your mental health, this is one of those things that can really help you do that.

Mike Zaino:
And the best part about it, Matt, we have options that have zero fees. I'll say that again, zero fees. None of my clients ever paid me a penny.

Producer:
Wow. Which is fantastic from a client perspective. I know, because as we talked about avoiding those excessive fees, hey, here could be a great way to do that for for you. And also, folks, we should should share as well that if you are curious, you want to learn more about annuities, about fixed index and annuities in particular. We've got an opportunity for you to do that through a book that was written by a good friend of ours named Ford Stokes. It is annuity 360 and Mike's got his copy right there. I've got my copy right here beside me on my desk. It's everything that you need to know about annuities. It's and it's not a hefty read. It really isn't. Again, we're not asking you to read War and Peace here. We're not asking you to read the entire Encyclopaedia Britannica cover to cover or something. It's less than 100 pages, but it's chock full of great information and you can actually get a free copy of it. No obligation at all. No, we're not going to send you a spam text and stuff like that. No, that's not the way we do business around here, around these parts. But you can get that free copy. And again, no obligation if you go to Money Matters with Mike. That's Money Matters with Mike. All one word dot com or call Mike Zaino 704 560 1573. And that's a great resource I think for folks.

Mike Zaino:
Mike It is a great resource map because again, you don't know what you don't know and this is a great way to learn what you don't know in a way that's an easy read, won't take long and at least give you a baseline knowledge of what you can expect because there are 100 types of annuities, some are great, some of them suck. I mean, that's the only way to put it right. It's like if I needed to get from Carolina to Los Angeles, there's 100 different ways I could get there. I could take a private Learjet that's that's got beds in it, or I could ride in a dump truck. I would much rather ride in the private Learjet laying down than than bumping down the road at 35 to 60 miles an hour in a dump truck going across country. So those of you that may have heard that annuities are bad, some annuities are bad, I agree with you, but some annuities are absolutely phenomenal. And I would challenge you to not get caught up in what they're called, but instead understand and take a strong look at what they accomplish. Because, you know, I have my mom, my mother in law, my aunt, and like I have my personal family in this and they sleep very well at night knowing that they don't have to worry about the local news, the regional news, the national news or the international news, and how that might negatively affect the value of their portfolios.

Producer:
Yeah, a lot of peace of mind there, as we say. And once again, folks, the number to call, if you'd like, a free copy of the book annuity. 360 7045601573.

Producer:
Want to know where your hard earned money is going. It's time for an inflation demonstration.

Producer:
So we're right around the corner. Believe it or not, we're talking at the beginning of the show. Can't believe it's February. Can't believe it's just about Super Bowl time as well. And right around the corner from the big game here. And it seems to me like I know people who just throw these big parties, a big Super Bowl watch parties each and every year. And they're always a lot of the staple food and beverage items that they all have out. And inflation is impacting it this year.

Mike Zaino:
It is. Madden And you know, the teams that are in it this year we got Philly and we got and we got Kansas City. And my team is not in there. I've been a glutton for punishment my entire life. I've been a miami Dolphins fan, right? So we rarely get in the dance. If we were ever there, I probably wouldn't go to a party. I'd probably sit at home and watch it because, you know, it's not my team. But in this case, when we've got two teams that I guess I guess of the two, I'm probably going to root for Philly this year. I like Mahomes and the cast of characters that they've got out. But I mean, I just think it's Phillies year this year. Personally, I hope I didn't offend anybody. But you know, inflation has driven up the prices for at home food by almost 12% over the past year. And some watch party food prices are easing, though, believe it or not, thanks to improvements in the supply chain, according to a new report from Wells Fargo. So what's going to cost less this year? Avocados. A lot of people love avocados. Why? Because it's the MVP of guacamole and that's going to be much less expensive this year thanks to a very strong crop. And Wells Fargo notes that prices have dropped about 20% for avocados. And another staple of most Super Bowl parties is something that I love. If they're done right, and that is chicken wings with supply at its highest level since the beginning of 2019, the price of chicken has dropped from about $3.38 a pound, the week of last year's Super Bowl down to $2.65 per pound, according to this report.

Mike Zaino:
A lot of folks like hamburgers. I like a good burger. Right. And so while hamburger prices are slightly elevated from last year, they've actually fallen below their peak, which was last July that we talked about cooking out for 4th of July and all that stuff, and then frying up some bacon on top of those burgers will cost less as well. This year, OC Steaks Sirloin have dropped almost $1 per pound since last December as well. So that's what's going to cost you less. But let's take a look at what's going to cost you more beer. That's the star of many Super Bowl commercials. Beer is about 11% price here compared with last year. Wine is up 4%. And then spirits, liquor, that's only up about 2%. Soda. If you want to drink some sodas or mix some sodas, a rise in ingredient and shipping costs means that soda is also up 25% from last year. And while that's unlikely to break the bank, a two liter bottle is costing about a little over $2. Something that's going to be a lot more expensive is potato chips. Potato chips from December of 2021, all the way up through last month are up 22% to where your average cost for a 16 ounce bag is over six bucks, $6.28. So those are the things that are going to cost more. But whatever you like to eat, whichever team you are rooting for, I hope you enjoy that Super Bowl and don't break the bank.

Producer:
Yeah, and I was surprised by those the chip prices there, Mike, because I for the past several years now, I've eaten low carb and so I don't buy potato chips and I'm like, wow, they've gone up since the last time I bought a bag. But, and I think the last time I bought a bag, I was living in New York and they were prices were high. There anyway to begin with.

Mike Zaino:
I don't envy you.

Producer:
Yeah, I it's been the one thing that I could have been able to stick to really over my. Oh, that's.

Mike Zaino:
Good. That's awesome.

Producer:
Yeah, it really is. But I'm not going to say I didn't put on a few during the years of the pandemic there. I think we all did. But that's going to do just about do it for the show this week here. Mike, I am grateful for you and all that you bring. We got more Smart Retirement Plan series info coming up next week on the show. I've got a lot more aspects of it to go through. So this will be for the next couple of weeks. We'll be talking about this, but I appreciate you all the insight. I again learn something every time and I know our listeners do as well.

Mike Zaino:
They do. At least I hope they do. I can't assume they do, right? I hope they do. I thank my listeners, everybody that tunes in religiously in this in the Charlotte market at 9:00 AM on Saturday mornings, everybody that listens to the show on podcast, wherever you might be in the world. Thank you so much. Without you guys, this show does not exist. I do hope that you have a phenomenal rest of the weekend and does always make it a great day.

Producer:
Thanks for listening to Money Matters with Mike. You deserve to work with a financial and insurance expert who can offer strategies for protecting and growing your hard earned money to schedule your free no obligation consultation visit Money Matters with Mike dot com or pick up the phone and call 704 560 1573

Producer:
Not affiliated with the United States government, Mike Zaino does not offer tax, legal or investment advice. Consult with your tax advisor or attorney regarding specific situations. Opinions expressed are subject to change without notice. These opinions are not intended as investment advice, nor do they predict future performance of any product. All information provided is believed to be from reliable sources. However, we make no representation or warranty as to the accuracy of any statement. This information is intended to be educational in nature and does not provide a guarantee or a specific result. All copyrights and trademarks to the property of the respective owners AMR Life assumes no responsibility or liability for the content of this message. The information contained herein is provided on an as is basis with no guarantees of completeness, accuracy, usefulness, timeliness, or the results obtained from the use of this information.

Producer:
Are you concerned about market volatility, rising taxes, economic uncertainty, and how it could all affect your future in retirement Then to tend to Money Matters with Mike, to learn how you can protect and grow your hard earned money. Money Matters with Mike every Saturday at 9 a.m. right here on FM 100.1 and AM 1340. Schedule a free no obligation consultation now at Money Matters with Mike dot com.

Producer:
Fixed annuities, including multi year guaranteed rate annuities, are not designed for short term investments and may be subject to restrictions, fees and surrender charges as described in the annuity contract. Guarantees are backed by the financial strength and claims paying ability of the issuer. Any examples used are for illustrative purposes only and do not take into account your particular investment objectives, financial situation or needs, and may not be suitable for all investors. It is not intended to predict the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.

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